TNK-BP is looking at acquisitions or joint ventures as a means of growing in the oil refining sector, a senior company executive said Wednesday.
In recent years, Russian oil firms have shown interest in acquisitions of refineries in Eastern Europe and Western Europe to expand their businesses selling refined oil products and promote their crude oil exports.
“We are now in a position to see what inorganic opportunities may exist,” Volker Woyke, TNK-BP’s vice president of refining, told an industry conference in London.
Inorganic growth often refers to acquisitions or joint ventures.
Woyke said the company’s refineries were running at 90 percent of their capacity.
This is higher than the average in Europe, where weak demand has forced refiners to lower their utilization rates to an estimated 80 percent.
Some oil refineries have been put up for sale. These include Royal Dutch Shell’s Stanlow in Britain and its Harburg and Heide in Germany as well as Grangemouth in Scotland, currently operated by Ineos.
LUKoil bought a stake in French major Total’s refinery in the Netherlands in June. Asked on the conference sidelines whether the firm was in talks to buy refineries in Europe, Woyke said, “We are speaking to many people like at conferences.”
He also said a new pipeline to export middle distillates via Black Sea ports would start in 2012.
“We have plans for a southern pipeline that will allow us to deliver middle distillates into Black sea ports. … The pipeline is planned for 2012,” he said.
Russia is the key supplier of middle distillates, such as diesel, to Europe. The new pipeline will boost export volumes further, which could hit refining margins for European refiners.
Some Russian refiners can now meet Europe’s tighter environmental specifications for refined oil such as ultra-low sulphur diesel.
Also on Wednesday, TNK-BP shareholder Viktor Vekselberg said he and his Russian partners would support BP’s choice to run the oil venture.
“The Russian shareholders will support the proposal that BP will make,” Vekselberg said. “We don’t have a legal decision yet, but I believe the board will in the next 10 days issue a resolution fixing this problem.”
TNK-BP, which accounts for a quarter of BP’s production and reserves, has been seeking a chief executive since Robert Dudley resigned on Dec. 1 as part of an agreement to end a conflict over strategy at the Moscow-based company. Mikhail Fridman, who controls half of TNK-BP with Vekselberg, Len Blavatnik and German Khan, has been interim CEO since May.
(Reuters, Bloomberg)
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